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Demand for Micro Health Insurance in Rural Bangladesh

Paper No:48

Author:Syed M. Ahsan, Syed Abdul Hamid and Shubhasish Barua



This paper analyses the demand for Micro Health Insurance (MHI) in rural Bangladesh by estimating the Willingness to Join (WTJ) and the Willingness to Pay (WTP) behaviour for an expanded version of the existing Micro Health Insurance (MHI) package of Grameen Kalyan (GK). A survey was conducted on about 4,000 randomly selected households in 120 villages drawn from seven districts. We chose 20 locations consisting of 10 programme and 10 control areas, each of which was adjacent to a programme area. We used a variant of the bidding game approach with an open-ended follow up question to elicit WTP. The results show that overall WTJ is 54 per cent and average WTP on the part of households who expressed WTJ the package (BDT406±171) are both quite low. The multivariate results show that a number of individual, household and village attributes including gender, knowledge about health insurance, economic factors, an episode of child delivery in the household and flood in the village, and location of household influence respondents’ decision to join the package as well as WTP. In view of the evident indifference to the GK type MHI coverage, and wider evidence cited in the recent literature, one inescapable conclusion may be that financial solvency for private heath insurance targeting the poor may remain a distant goal.
Key Words: Demand, Micro Health Insurance, Willingness to Join, Willingness to Pay, Bidding
Game, Grameen Kalyan, Bangladesh.
JEL Classification: G22, J44, I12, H51, H52, and H53, and H75.

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